Are IRS Mail Audits Really Something to Worry About?
Most people when they hear the words IRS audit have a mini nervous breakdown. As they picture an income tax audit synonymous with sitting in a cold, dark room with IRS agents that grill you about your tax return and income, trying to catch you out as a tax cheat.
Fortunately, for most people, this is far from being real. The IRS now does 70% of its audits via mail. However, just because you get an IRS audit letter and not a visit by an IRS agent, the outcome may not be any different than a face-to-face audit. In fact, in 2016, the IRS changed the policy with regard to mail audits.
The average amount of additional tax that is owed in an audit is more than $6,500, this does not include penalties and interest.
Face-to-face audits only have a slightly higher change rate, which is 92%. But because many face-to-face audits do involve higher-income and business returns, the average tax owed is sometimes 10 times higher than with mail audits.
Just make sure you respond the right way
If you are audited by mail, you must respond by mail with a comprehensive written explanation. This is not nearly as intimidating as answering questions in a face-to-face meeting.
In most mail audits, the IRS will ask you to:
- Provide receipts/ documents to prove an item they are questioning you about is on your return.
- Explain any circumstances that prevented you from providing the information they want.
If you provide everything by the deadline on your audit notice, you should be in the clear. And even if you no longer have receipts, your explanation could be enough to sway the IRS to your favor.
For more details on our income tax audit services, please do not hesitate to contact us at this number (251) 365-2893, to make an appointment with Dean Tax Service, we are based in the Mobile, AL area.